NEA mgmt for upgrading capacity of Trishuli III 'A' to 90 MW

The management of Nepal Electricity Authority (NEA) has recommended to the board of directors of NEA to upgrade capacity of Trishuli III ´A´ hydropower project to 90 MW from existing 60 MW.
“The NEA management is convinced that capacity upgradation of the project is beneficial to it. Hence, we have forwarded a recommendation for the same to the board,” Rameshwore Yadav, managing director of the NEA, told Republica.
Earlier, the government had asked the NEA management to come up with an opinion on capacity upgradation.
“We took the decision after conducting necessary discussions,” added Yadav.
Yadav submitted the recommendation to the board meeting on Sunday itself.
"The board, however, has not taken any decision on capacity upgradation,” Yadav added.
The previous government led like Dr Babu Ram Bhattarai had decided to upgrade capacity of the project. However, the move soon drew criticisms. Responding to a writ petition, the Supreme Court had later issued show cause notice to the government.
The cabinet had formally decided to upgrade the capacity of the project in the beginning of 2013. The NEA board, however, hadn´t endorsed the decision.
Following this, the government formed a committee under Moti Bahadur Kunwar, joint secretary at the Ministry of Energy (MoE), to study whether it would be appropriate to upgrade the project capacity. The committee, however, did not give any clear recommendation.
The run-of-the-river type project, which is being developed by China Gezhouba Group Co with US$ 89 million soft loan from the Exim Bank of China, will have to get nod of the NEA board for capacity upgradation.
The Bhattarai-led government stood in favor of upgrading the project after the Chinese contractor informed NEA that it can upgrade the project to 90 MW at the total cost of US$ 132 million.
"We will have to wait and see how the NEA board reacts to our recommendation," Yadav said.
According to a source at the MoE, Energy Ministry Umakant Jha, who is also the chairman of the NEA board, is in the favor of upgrading the capacity of the project. "Shanta Raj Subedi, secretary at the finance ministry, is also in the favor of capacity upgradation," the source revealed.
Earlier, the then opposition party leaders, including Dr Ramsharan Mahat of Nepali Congress and Gokarna Bista of CPN-UML, had vehemently opposed the decision to increase capacity of the project.

NEA proposes hiking electricity tariff by 20 pc

The board of directors of the Nepal Electricity Authority (NEA) has decided to forward a proposal to increase the retail electricity tariff by 20 percent to the Electricity Tariff Fixation Commission ( ETFC) on Sunday.
"The NEA board meeting held on Sunday has formally made a decision to ask the ETFC to increase the retail electricity tariff by 20 percent," Rameshwar Yadav, managing director of the NEA, told Republica.
ETFC has also indicated that it will endorse the recommendation of the NEA board. The issue of revising the electricity tariff has fallen in limbo for the last 11 years. It has also been a matter of dispute in the hydropower sector.
Meanwhile, ETFC is also working to develop a system of automatic hike of electricity tariff by 5 percent each year, according to Gyanendra Lal Pradhan, a hydropower expert.
Currently, the power tariff is Rs 7 per unit. "The hike will help NEA to cut losses which hover around Rs 7 billion annually," experts say. "The hike in tariff should not be taken as a measure to relieve the NEA of losses, rather it should also be seen a measure to encourage the private sector to make fresh investment in the hydropower sector," Pradhan said.
Most of the countries slap competitive prices of power in order to keep the power sector functional. "We also have to increase the tariff but that shouldn´t be an extra burden on the consumers," Pradhan argued. "Rather it should be helping them to get enough power all the time so that the moribund industrial sector of the county gets a remedy to come out from the current situation."
The power prices should be in sync with the inflationary pressure in the market. "The 11-year long issue of increasing electricity tariff should be resolved as soon as possible," Pradhan said.

Govt extends RFP submission deadline

The government has extended the deadline for submission of request of proposal (RFP) document for the Kathmandu-Tarai Fast Track project from the selected Indian infrastructure developers by a month till 21 June.
“We decided to give one more month to the selected infrastructure developers to submit RFP document,” Tulasi Prasad Sitaula, secretary at the Ministry of Physical Infrastructure and Transport (MoPIT), told Republica.
The government has shortlisted three Indian infrastructure developers -- namely Reliance Infrastructure, Larsen & Tourbo (L&T) and Infrastructure Leasing & Financial Services (IL&FC) to develop the project.
Earlier, the government had asked the three firms to submit RFP document within three months. It decided to extend the deadline after all the firms requested for more time.
The firms were selected on the basis of their previous experience working under the built-own-operate-transfer (BOOT) and other capabilities such as capital and their past history of completing work on time. The government shortlisted these firms from nine aspirant companies that had registered expression of interest to develop the project.
The government has decided to develop the project under the BOOT Act.
"We will conduct detailed study on their RFPs once they submit the required documents,” added Sitaula.
The MoPIT, which is overseeing the implementation of the project, has said the track opening works of the mega project have already been completed. The 76-km expressway links Kathmandu with Nijgadh of Bara.
According to the cost estimation of the Asian Development Bank (ADB) in 2008, Rs 67 billion would be required to develop the project.

NEA chief involved in irregularities worth millions

It has been found that senior officials of Nepal Electricity Authority (NEA), including Managing Director Rameshwar Yadav, were involved in unauthorized supply of electricity to more than a dozen industries, causing losses worth millions of rupees to the government, a latest report says.
The report submitted by the high-level probe committee formed by the government has named officials involved in irregularities at the five different load distribution centers of NEA along the Itahari-Biratnagar industrial corridor. The officials were involved in such unlawful activities since August 2006, the report says.
According to the report, Yadav had permitted round-the-clock electricity supply to Pashupati Simpack, Shivam Plastic and Kamala Rolling Mills when he was the general manager of NEA in February 2011. Yadav, however, couldn"t be contacted for comments.
According to an official involved in the investigation, irregularities in five different load distribution centers have caused loss of around one million per day to NEA.
Some of the officials involved in such activities have already retired from NEA. The report says former general managers Shyam Bahadur Shrestha, Deepak Upadhaya and Yugal Kishore Shah, who have already retired from NEA were also involved in the irregularities.
According to the report, Shrestha had permitted round-the-clock power supply to Reliance Spinning Mills in 2006 and Upadhya to Arihanta Multi Fibers, Raghupati Jute Mills and Nigale Cement, Dhankuta. Similarly, Shah had permitted round-the-clock power supply to Hulas Wire Industries.
Sudhir Prasad Singh, regional director of NEA has also been found involved in illegal supply of electricity to industries along the corridor.
The government had formed the probe committee after it was revealed that NEA"s load distribution centers in Itahari, Duhabi, Dhankuta and Siraha illegally supplied electricity to 14 firms along the Itahari-Biratnagar industrial corridor even during load-shedding hours.
The probe committee was led by Deputy Director General of the Department of Electricity Development Sundar Shyam Shrestha.
The probe committee submitted the report to energy secretary Hari Ram Koirala a week ago. “However, the ministry has returned the report to NEA asking it to carry out a detailed investigation,” a source at the ministry told Republica.

No headway in minimum pay hike talks

The tripartite negotiation among government, employers and employees on minimum salary of workers is not making any headway as both employees and employers continue to stick to their stance.
´Employees are not ready to compromise on their demand for minimum monthly wage of Rs 12,400, while employers are for increasing pay based on inflation and consumer market price,” a government official involved in the negotiation told Republica.
Pashupati Murarka, vice president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said employers were not in a position to double the existing minimum monthly pay of Rs 6,200. ´We are ready to increase the minimum wage by around 18 percent which would be a genuine increment based on calculation of inflation over the past two years,´ Murarka told Republica on Friday evening.
Representatives of employers" organization and trade unions are holding series of negotiation meetings in the presence of government officials since one month.
Eleven trade unions affiliated to different political parties have been pushing for doubling the existing minimum wage.
“The trade union representatives are showing no sign of compromise,” the official said.
The negotiation meeting held on Friday concluded without any progress as both the parties - employers and employees - denied to budge from their stance.
´We are ready to increase minimum wage as per the market situation,´ Murarka said. ´The trade union leaders should understand the existing gloom in the industrial sector.”
Meanwhile, representatives of both the employers and employees have raised the issue of social security for workers. ´But both the employers and employees have their own demands on it as well,” Kewal Prasad Bhandari, executive director of the Social Security Fund (SSF), said.
Highlighting the importance of social security schemes for decent labor market, Bhandari said both the employers and employees should understand each other. “Doubling of minimum wage might have negative effects in the economy as only around 300,000 workers will be benefited from the pay hike,´ Bhandari said. ´This increment will pull the inflation up and other people working in the informal sector will suffer.´
The industrial sector of the country is already reeling under power shortage. Bhandari said minimum wage should be raised based on level of productivity of industrial enterprises.
´The ongoing negotiation should conclude with an understanding to establish a more scientific system of increasing minimum wage every two years,´ added Bhandari
Two years ago, employers, trade unions and government officials had agreed to fix minimum monthly remuneration of worker at Rs 6200, including allowance of Rs 2,650, and daily wage at Rs 231.

HIDCL may invest in Upper Dordi 'A' hydro project

Hydroelectricity Investment and Development Company Limited (HIDCL), a public enterprise that was formed to address energy crisis in the country by injecting investment in the hydropower sector, is mulling over investing in Upper Dordi ´A´ hydropower project.
The project, which is estimated to cost Rs 4 billion, is being developed by Liberty Energy Hydropower Company Limited (LEHCL). The HIDCL has formed a risk assessment cell (RAC) to conduct a study on whether to invest in the project.
According to a source at the Ministry of Energy (MoE), the four-member RAC has already completed field study of the Lamjung-based project.
Keshav Dhwaj Adhikari, joint secretary at the MoE, leads the RAC. The other members of the RAC are Sagar Raj Gautam, senior divisional engineer at the Department of Electricity Development (DoED); Churna Bahadur Oli from DoED; and Sanjeev Baral, senior divisional engineer at the MoE.
Kush Kumar Joshi, chairman of LEHCL, said the HIDCL has agreed in principle to invest in the project. “Similarly, Nepal Investment Bank Limited (NIBL) is leading a consortium of banks to invest in the project. State-owned Nepal Bank Limited has also agreed to invest,” Joshi said. He further added that NIDC Development Bank, Global Bank and Grameen Bikas Bank are also in the consortium.
However, the HIDCL, which has already invested Rs 1billion in Myagdi-based Mistri Khola (42 MW) hydropower project, has not taken any official decision about investing in the Upper Dordi ´A´ project.
"The HIDCL will decide on the issue only after the RAC gives its suggestion," the source said. "The HIDCL does not have its own Act regarding investment."
Nepal Rastra Bank (NRB), the central monetary authority, has allowed it to make investment through commercial banks until it develop its investment regulation.
The project has already signed power purchase agreement (PPA) with Nepal Electricity Authority (NEA). As per the agreement, NEA will purchase power generated by it at Rs 4.8 per unit in the wet season and Rs 8.4 per unit in the dry season.
"We hope to get power generation license from the DoED soon," Joshi said.
The electricity generated from the proposed run-of-the river type project will be connected to the national power grid through the proposed Udipur Hub near Middle Marsyangdi Hydropower Project.
According to the company, it would need to build about 12 km long transmission line to connect energy generated from the project to the national grid.
"The project has payback period of be five years and seven months," according to information posted on LEHCL´s web portal.
The project will start generation within three years of the start of construction works.

Consortium to invest Rs 6 billion in Mistri Khola project

A consortium of seven banking institutions and a group of 80 businessmen have teamed up to invest Rs 6 billion in Mistri Khola (42 MW) hydropower project.
Robust Energy is developing the project located in Myagdi district. “Finally, we have arranged financial resources for the development of the project," Subrat Dhital, chairman of Robust Energy, said.
According to a company source, Nabil Bank, Nepal Investment Bank Limited (NIBL), Nepal Bank Limited (NBL), Laxmi Bank, Siddhartha Bank, Ace Development Bank and Hydroelectricity Investment and Development Company Limited (HIDCL) are investing in the project.
“The consortium of banking institutions is investing Rs 4.24 billion in the project,” the source said, adding, Nabil, NIBL and HIDCL are investing Rs 1 billion each in the project. “NBL is investing Rs 500 million, Laxmi and Siddhartha are spending Rs 400 million each, and Ace is investing Rs 240 million.”
Businessmen investing in the project include Min Bahadur Gurung, Chandra Dhakal, Pradeep Jung Pandey, Subrat Dhital and Suriddha Raj Ghimire.
Confirming the development, Gokarna Raj Pantha, senior divisional engineer at the Department of Electricity Development (DoED) said that the project has become successful in demonstrating financial sources.
Nepal Electricity Authority (NEA), the state-owned hydropower regulator, and the company had signed power purchase agreement (PPA) in February, 2011.
"The government granted power generation license to the company one year after the signing of PPA," Pantha said.
As per the PPA, NEA will purchase electricity generated by Robust Energy at Rs 5.4 per unit.
The project, which is expected to start power generation by May, 2016, is the first hydropower project in the country entirely funded by local banks and business persons.
Officials of Robust Energy said a 48-km transmission line needs to be built to connect power generated by the project to the national grid.
Mistri Khola is the first venture of HIDCL, a newly established public enterprise. The company has paid-up capital of Rs 8 billion.

GMR seeks generation license for Upper Karnali

GMR Upper Karnali Hydropower Company Limited, a subsidiary of Indian infrastructure developer GMR, has applied for power generation license for Upper Karnali (900 MW) hydropower project.
"GMR has applied for the generation license as the validity of its survey license is expiring soon," a source privy to the development told Republica. "The application for generation license will keep the company in a safe side."
The company has submitted application for generation license at the Investment Board Nepal (IBN).
"The IBN will now lead the company towards project development agreement (PDA) negotiation," the source further revealed. "Before that, the IBN has asked the company to sign the project negotiations agreement (PNA)."
According to the source, the IBN has asked GMR to sign PNA as soon as possible so that they could enter in the PDA negotiation process.
“Officials of GMR have informed us that the company was holding discussion about signing PNA with the authorities concerned,” the source said.
The government had first granted survey license to GMR for the Upper Karnali in May 2008.
The Mohan Vaidya led CPN-Maoist has been repeatedly threatening to halt the development of the project that is based in the mid-western region of the country.
Himtal Hydropower Company, another subsidiary of GMR in Nepal, is involved in the development of Upper Marsyangdi (600 MW) hydropower project.
"The GMR officials seem proactive at some point," an official at the IBN engaged in the issues told Republica. "They even make a calculation of what other developers are going through."
GMR says 46.85 hectares of private land has to be acquired for the Upper Karnali project.

NPBCL gets go-ahead for tunnel highway

The government on Tuesday granted permission to construct Kathmandu-Kulekhani-Hetauda Tunnel Highway to Nepal Purwadhar Bikas Company Limited (NPBCL).
"We are hopeful that the company will be successful to demonstrate the financial closure of the project within a year," Tulasi Prasad Sitaula, secretary at the Ministry of Physical Infrastructure and Transport (MoPIT), said.
The government has given go-ahead to the company on condition it achives financial closure within one year.
The project that connects Kathmandu and Hetauda by 58-kilometer is estimated to cost Rs 34.5 billion.
According to Lal Krishna KC, vice president of the company, the project is estimated to be completed in 44 months. "That means the project will come into operation by 2016," KC said.
The company, however, is yet to prepare convincing payback plan.

Industry ministry to study status of 10 more firms

After recommending ´sick industry´ status to four firms, the Ministry of Industry (MoI) is all set to conduct field study of another 10 firms that have applied for ´sick´ industry status.
“Our technical committee is preparing to dispatch a team to conduct field study of those 10 firms," a member of the technical committee under the ministry´s Industrial Promotion Division (IPD), told Republica.
The technical committee, which has been assigned to find out actual situation of the firms that have applied for sick industry status, sends a team of officials after completing their due diligence auditing.
The ministry has outsourced a team of chartered accountants to do due diligence auditing of the firms.
The 10 firms where the team will conduct field study are: Kharel Wooden & Metal Furnitures, Nava Durga Khadya Udhyog, Shree Antu Tea Industry, Laxmi Banaspati Ghee Udhyog, Bhrikuti Pulp and Paper, Gita Cold Store, Momento Apparels, Shirish Herbal, Shree Distillery and Dolphin Manner.
"The due diligence auditing report of these firms is in line with the financial statements that these forms had submitted while applying for sick industry status," the official said. "Now, the team will study the reasons behind financial failure of those firms.”
The ministry has already submitted a proposal to the cabinet to declare four firms -- Birat Leather, Birat Shoes, Nepal Borders and Basulinga Pvt Ltd - as sick and recommended them financial and non-financial facilities.
Yam Kumari Khatiwada, joint secretary at MoI who leads the technical committee, told Republica that a total of 37 firms had applied for ´sick industry´ status. These firms filed applications at the ministry after the government announced a program to revive sick industries in the country in 2011.

IBN seeks Rs 280m to hire consultants for infra projects

The Investment Board Nepal (IBN) has asked the government to set aside fund of Rs 280 million in the upcoming budget to hire around 28 consultants for fourteen infrastructure projects.
"We need at least two consultants for each project," an official at the accounting section of IBN told Republica. “The finance ministry and IBN, however, are yet to sit together for further discussion.”
The IBN, a high-level government entity that was formed more than one and half years, has been authorized to facilitate implementation of the 14 projects.
The projects that are in the bag of IBN include five mega hydropower projects. Similarly, other projects include project to upgrade Tribhuvan International Airport, Kathmandu Metro Railway, Kathmandu-Tarai Fast Track Road, Nijgadh Second International Airport, among others.
According to the official, the International Finance Corporation (IFC), a private sector lending arm of the World Bank, had developed the budget proposal of the IBN. "The IFC developed this proposal based on international practices of hiring consultants for large scale projects,” the official said.
This is the first time IBN is seeking budget from the government. So far, Office of the Prime Minister and Council of Ministers (OPMCM) has been providing budget to IBN.
The IBN is currently working on finalizing project development agreement (PDA) negotiation with four mega hydropower projects, namely, Arun III, Upper Marsyangdi, Upper Karnali and Tamakoshi.

A decade on, sick-industries revival program still not taking off

The government formed a committee to study the situation of sick industries in 1994 for the first time, with the aim of reviving them and increasing the manufacturing sector´s contribution to the country´s gross domestic product (GDP) and ultimately making the economy more vibrant.
Two things have happened since. One, the government has kept on forming different committees and study teams each year with instructions to find a way to revive these sick industries but not a single firm has had a new lease of life in the last 10 years.
Second, the contribution of the manufacturing sector to the GDP has constantly fallen to reach 6.2 percent in Fiscal Year 2011/12 -- the lowest in the last decade.
An enterprise can get a ‘sick-industries’ tag when it has either stopped operating or is operating at less then 20 percent of their production capacity for five years in a row due to external factors such as policy changes and natural calamities. Once that is done, it is qualified to get support and facilities from the government that will help its rehabilitation.
Looking at how the government has been forming committees and study teams gives an impression that it is trying hard to fix things and revive the country´s industrial sector. But, that is just an illusion, according to experts. The real problem lies somewhere else, they say.
"Vested interests of politicians and bureaucrats, in some cases, play a major role in creating friction between the mechanism to revive the sick industries," an official involved in the technical committee a -- formed to study the actual status of the sick industries and recommend ways of reviving them -- at the Ministry of Industry (MoI), said.
The government, in last 10 years, formed around a dozen of different committees in order to study and uplift the situation of sick-industries in the country. All of them recommended what should be done but none of them precisely categorized the criteria for sick-industries.
"The situation of sick industries is the same now as it was in 1994 -- when the first committee was formed to restore the situation of sick industries," Bishnu Dhakal, under-secretary at the MoI, said.
The Dr Babu Ram Bhattarai-led government formed an 8-member Sick-Industries Rehabilitation High-Level Task Force (SIR HLTF) under the leadership of Dipendra Bahadur Kshetry, vice-chairman of the National Planning Commission (NPC), back in 2011. The 20 pages-long report that was prepared by the SIR HLTF cleared the way for identifying the criteria to declare sick-industries in the country.
Based on the criteria set by the report, the MoI asked for application from the industries who would like to be declared as sick. 37 firms applied to the ministry to get the status of sick-industries. The MoI, which was entrusted to facilitate the development of the industrial growth in the country, formed a technical committee to study the actual situation of the firms that registered applications. It even hired a team of chartered accountants to do due diligence auditing of the firms in order to know the financial situation of the firms.
As the things have been moving forward, the ministry also forwarded a proposal to the council of ministers to declare four firms -- Birat Leather, Birat Shoes, Nepal Boarders Pvt Ltd and Basulingi Pvt Ltd -- as sick-industries.
The technical committee also made recommendations to the government about the financial and non-financial support that the firms should receive.
"The government is yet to declare those firms as sick," an official at the ministry said. "It´s still unclear whether the government would okay the recommendations that the committee made about the financial and non-financial support to the firms."
The program to revive sick-industries has gained slight momentum but there are other barriers that are hindering the smooth implementation of the program.
"There should be a clear understanding among the different government entities to take this program forward," Dhakal said.
Meanwhile, the constant changes of the officials involved in the process is another major hurdle in materializing the program. "The top level official was changed three times in the Industrial Promotion Division (IPD) of the ministry after the technical committee was formed," an official at the ministry said. "The transfer of the leader of the technical committee has also affected the timely implementation of the program."
The government´s move to revive the sick industries has been on limbo for years in one hand. On the other hand, problems such as acute power shortages, labor unrest and political instability have deviated investors from making fresh investment in the productive sector of the country.
"It would have made a difference in the country´s moribund industrial sector had the government implemented the sick-industries revival program effectively," Pashupati Murarka, vice president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), said.
That is not all it is. Industrialists who have political influence also lobby for declaring their own industries sick even though they may not fall under the criteria.
"Politicians, mainly the minister at the MoI, put a lot of pressure to declare the firms sick whose owners are close to him in many cases," the official said. "That stops the officials from working properly and providing relief to the genuinely sick firms."
The constantly deteriorating manufacturing sector was expecting some exogenous intervention to become more productive after the country entered the peace process and the holding of Constituent Assembly (CA) elections in 2008 -- which ended in May 2012 without promulgating the constitution in the country. "But that hope was shattered as the industrial sector became more volatile since then," Murarka said.

Trade unions flay pact to ban strikes in industrial corridor

Three big labor unions in the country have strongly criticized the decision to declare Birgunj-Pathlaiya industrial corridor a strike-free zone.
While Nepali Congress-affiliated Nepal Trade Union Congress-Independent (NTUC-I) and General Federation of Nepalese Trade Unions (GEFONT), the labor wing of CPN-UML, have said the agreement was signed without following due procedure, All Nepal Revolutionary Trade Union Federation (ANRTUF) termed the agreement a ploy to weaken industrial workers. ANRTUF is the federation of workers supporting CPN-Maoist.
Birgunj Chamber of Commerce and Industry and Bara Chamber of Commerce and Industry along with seven trade unions affiliated to different political parties had signed a 19-point pact in the presence of government officials on Tuesday that, among others, banned all forms of strikes in the industrial corridor.
“The agreement was signed without following due procedure,” Bishnu Rimal, chairman of GEFONT, said. “Even though our leaders have signed it, we won´t accept it.” Rimal further added that their local leaders might have signed the agreement out of naivety.
Laxman Bahadur Basnet, president of the NTUC-I, echoed Rimal and said the presence home ministry officials in the signing ceremony suggests that something is wrong as labor issues are dealt by labor and employment ministry.
Officials of Birgunj Chamber of Commerce and Industry (BCCI), however, argued that all due procedures have been followed while signing the agreement. “The agreement was signed to protect the dying industrial sector. All stakeholders have realized that strikes and bandas are costing our economy dear,” Ashok Kumar Vaidya, president of the BCCI, told Republica over phone.
Moreover, ANRTUF has launched protest programs to show its dissent on the agreement. “We have decided to erect black flags at the entrance of all industries along the corridor on May 22 and 23 if the government didn´t raise minimum remuneration of workers within a week,” Ramdeep Acharya, coordinator of the ANRTUF, said. “If our demands aren´t addressed, we will close all factories on the corridor on May 24.”
According to Acharya, his trade union had submitted its 25-point demand to the government on March 24.
Meanwhile, All Nepal Trade Union Federation (ANTUF) -- labor wing of the UCPN (Maoist) -- has welcomed the agreement. "If the government addressed our demand for salary hike and social security for workers, we are ready to signed such agreements on other industrial areas as well,” Shalik Ram Jammakattel, chairman of the ANTUF, said. "The agreement signed on Tuesday signals that labor unions are serious about the industrial situation in the country."

MoE asks NEA to dig deeper into power supply irregularities

The Ministry of Energy (MoE) has forwarded the report of the high-level probe committee formed to study irregularities in five load distribution centers to Nepal Electricity Authority (NEA) for further investigation into the issue and identification of the perpetrators.
“The ministry forwarded the report to NEA on Monday as per a secretary-level decision,” an official at MoE told Republica.
The government had formed the probe team after it was revealed that NEA´s load distribution centers in Itahari, Duhabi, Biratnagar, Dhankuta and Siraha illegally supplied electricity to 14 firms in Itahari-Biratnagar industrial corridor even during load-shedding.
The team had found massive irregularities in the distribution centers and had recommended to the government to conduct detailed investigation into the issue and identify officials and industrialists involved in the wrongdoing, the official added.
The probe concluded that officials at the five distribution centers unlawfully supplied round the clock electricity to 14 firms along Itahari-Biratnagar industrial corridor. There are around more than 300 factories in the corridor.
The committee had submitted its report to the ministry last week after conducting a field study. According to a member of the committee, it had looked into electricity supply schedule of the five distribution centers. "We found that those distribution centers supplied electricity to the 14 firms going against the nationwide load-shedding schedule," the member said.
The government had formed the probe committee after the industrialists and locals complained about the wrongdoings of the five distribution centers at a meeting of the Nepal Business Forum (NBF) on March 25. They had also criticized Chief Secretary Lila Mani Poudel, who was also the chairman of NEA before the new government was formed, for overlooking the issue.
Poudel directed MoE to form the probe committee right after the meeting, the official added.
The firms that enjoyed round the clock power supply by influencing NEA officials at the distribution centers are Raghupati Jute Mill, Maruti Cements and Asian Thai Food, among others.
“Promoters of the 14 firms were found to have bribed officials at the distribution centers to ensure round the clock power supply at their factories,” the member of the probe team told Republica.
The probe committee led by Sundar Shyam Shrestha, deputy director general of the Department of Electricity development (DoED), had three officials from the ministry and a representative from the NEA as members.

'14 firms saved Rs 50m in energy bills by influencing NEA officials'

A government probe has concluded that 14 firms along the Itahari-Biratnagar industrial corridor saved energy bills worth at least Rs 50 million over the past three months ending mid-April by influencing officials of five distribution centers of Nepal Electricity Authority (NEA) to provide them round the clock electricity even during load-shedding.
The firms paid just Rs 6 for a unit of electricity. Power generated from generators would have cost them around Rs 25 per unit.
“As the irregularity is of large scale, the investigation team has recommended that the government probe further in order to identify the NEA officials who unlawfully supplied electricity to private firms,” a member of the investigation team told Republica on Sunday.
Ministry of Energy (MoE), which looks after NEA, had formed a five-member probe to look into the issue following widespread criticism.
According to sources, owners of the firms ensured round the clock electricity to their production facilities by paying kickbacks to officials of different distribution centers of NEA. Those firms had managed to get uninterrupted power supply from NEA´s distribution centers in Itahari, Duhabi, Biratnagar, Dhankuta and Siraha.
The team submitted its report to the ministry last week after conducting field study.
“The probe team looked into electricity supply scheduled of the five distribution centers. We found that those distribution centers supplied electricity to the 14 firms going against the nationwide load-shedding schedule,” the member added.
According to MoE officials, locals had complained about the issue last year as well. But their complaints were not entertained. “No one showed interest to look into the issue then,” an official at MoE said preferring not to be named.
The firms that enjoyed round the clock power supply by influencing NEA officials are Raghupati Jute Mill, Baba Jute Mill, Maruti Cements and Asian Thai Food, among others.
“Owners of 14 firms are found to have bribed officials at the distribution centers to ensure 24-hour power supply,” the probe committee member told Republica.
The member said the firms saved Rs 19 per unit of electricity consumed in the three-month period.
“Now, it is up to board of directors of the NEA to take actions against the perpetrators," the member said.
The investigation team led by Sundar Shyam Shrestha, deputy director general of the Department of Electricity Development (DoED), comprised three officials from the ministry and a representative from the NEA.

Govt to review 1,300 survey license applications

In a bid to give impetus to hydropower development in the country, the government is reviewing additional 1,300 survey license applications of hydroelectric projects with a collective installed capacity of around 10,000 megawatts.
The Department of Electricity Development (DoED), a government entity that issues licenses to hydropower projects, has said it would complete the review of all 1,300 applications within the next couple of months.
"We will decide on issuing licenses to applicants after completion of the review," Gokarna Raj Pantha, a senior divisional engineer and spokesperson at DoED, told Republica. The move, according to Pantha, is part of the government´s plan to discourage the tendency of holding licenses without putting in serious efforts to develop hydro projects.
DoED, which has already cancelled 565 survey applications in the last couple of months, is serious about identifying genuine hydropower developers.
Pantha said applications currently under review were registered at DoED over the last seven years. "None of the application was registered after the government increased the survey license fee," Pantha added.
The government had earlier increased survey license fee in October 2012.
"As per my understanding, only 100 to 200 survey license applications will be approved," Pantha said.
As of now, DoED has said it would approve survey licenses of those projects that are willing to deposit fees as per the revised fee structure.
"Though the applications were registered prior to revision of fees, applicants will have to refer to the revised fee structure to obtain licenses," Pantha said.
The new fees are: Rs 1 million for 1MW to 5MW projects, Rs 2 million for 5 MW to 10 MW, Rs 3 million for 10MW to 25MW, Rs 4 million for 25 MW to 100 MW, Rs 5 million for 100MW to 500MW and Rs 6 million for hydro projects above 500 MW capacity.

SN Power forms PDA negotiation team

SN Power, a Norwegian power involved in the development of Tamakoshi III (650 MW) hydropower project, has formed a six-member project development agreement (PDA) negotiation team.
The formation of PDA negotiation team right after SN Power signed project negotiation agreement (PNA) with the Investment Board Nepal (IBN) indicates that the Norwegian form is serious about developing the project.
"SN Power has sent a letter to IBN including details of the members in the PDA negotiation team,” a source privy to the issue told Republica.
The team includes Dr Sandeep Shah, vice president and country director of SN Power; Stale Rustad, project director for Asia of SN Power; Daniel Seeger, legal counsel; Christian Knoph, director, project finance; Ronald Storhammar, finance director; and Apar Neupane, business manager.
"We will be supported by Sinha Verma Law Concern´s senior advocate Anil Kumar Sinha and Rajeshwor Shrestha in the negotiations," reads the letter sent by SN Power to IBN. "We may add other resources in the team as per the requirement."
Confirming the development, Radhes Pant, CEO of IBN, said SN Power has sent the details of its PDA negotiation team.
According to the source, the first round of negotiations will take place on May 27.
IBN has already formed PDA negotiation team on its part. The team includes Pant, Mukunda Prasad Paudel, joint secretary at IBN; Anup Kumar Upadhyay, director general at the Department of Electricity Development (DoED); Baikuntha Aryal, joint secretary at the Ministry of Finance; and Keshab Dhoj Adhikari, joint secretary at the Ministry of Energy.
IBN and SN Power had signed PNA couple of weeks ago. As per the PNA, the developer should complete PDA negotiation within the 18 months of the signing of PNA.
SN Power had got survey license for the project in 2007.
According to the letter sent by SN Power, Shah and Rustad will be leading the negotiation from their side. Pant will lead the government side in the negotiation.
The development will get generation license after the PDA is signed.
Environment Impact Assessment (EIA) of the project, which is estimated to cost Rs 120 billion, has already been done.

Indian state govts against bilateral trade: Experts

Activities of Indian state governments that go against the spirit of bilateral trade agreement are affecting Nepal-India trade, experts said on Tuesday.
“Nepali exporters are facing different hurdles due to intervention by the Uttar Pradesh government," Prof Bishwambher Pyakuryal, a seasoned economist, said. “The cost of economic non-cooperation is very high in the region. It´s even higher in the bilateral trade.”
Speaking at a workshop on ´Breaking Down Barriers to Regional Trade and Cooperation in South Asia´ here on Tuesday, Pyakuryal said the union government of India should clarify these issues. “We have been told by leaders of Uttar Pradesh to contact them rather than officials of the union government. Is this what we need to do?” he questioned.
The workshop, which was organized jointly by the South Asia Watch on Trade, Economics and Environment (SAWTEE), and International Finance Corporation (IFC), mainly focused on non-tariff barriers.
“The non-tariff barriers are intense than the tariff barriers in the South Asia region," Dr Posh Raj Pandey, trade economist and chairman of SAWTEE, said.
Highlighting the major issues behind low intra-regional trade, Pandey spelled out three types of deficit lurking in the region. “Trust deficit, trade deficit and institutional deficit are pulling us back," Pandey said. "We have to work on first increasing the trust among us and enhance the institutional capacity."
There is deficit in many areas, Dr Ratnakar Adhikari, regional trade expert at SAWTEE, said. “Infrastructure deficit and vision deficit are the other factors hindering regional trade. The trade barriers in this part of the world are unique and we have to handle them with care," Adhikari said.
Nepal has comparative edge in hydropower but that has not been realized yet. Tasheen Sayed, country manager of the World Bank, said that there should be investment in the development of cross-border infrastructure such as transmission lines. "Nepal can benefit from the energy sector," Sayed said. "World Bank is focusing on development of transmission lines in the cross-border area between Nepal and India.”
Meanwhile, David Gould, chief economist at the South Asia Region Office of the World Bank, presented a paper on ´Regional Trade and Cooperation in South Asia´.
"The asymmetry of the size of the economy in the South Asia Region is also a major reason for low intra-regional trade," Gould said in his paper.

Nepal-Canada Business Executive Committee formed

Nepal-Canada Business Executive Committee (NCBEC) was formed here on Monday aiming to further strengthen bilateral trade and investment.
The committee was launched in the presence of high-level government officials, Ambassador of Canada to Nepal Stewart Beck and business people from both the countries.
"This forum will help us to attract investment from Canada," Suraj Vaidya, president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) said after the launch of NCBEC.
Gyanendra Lal Pradhan, executive member and chairperson of energy committee at the FNCCI; Om Bahadur Rajbhandari, executive member and coordinator of urban development forum at the FNCCI; Chandra Prasad Dhakal, executive member and coordinator of investment promotion forum at the FNCCI; and Ritu Vaidya of Vaidya´s Organization of Industries and Trading House are the members in the committee from Nepali side. Similarly, members from Canada in the committee are Pramod Radhakrishnan of IRD, Pradeep Kumar of Lea Associates, and Alisa Kreynes of Manitoba Hydro.
"I am quite hopeful that this forum will take forward trade and investment relationship between the two countries,” Ambassador Beck said.
Beck, who is leading the Canadian delegation in Nepal, expressed optimism that Nepal´s investment climate will get better in course of time.
The delegation is looking for investment avenues in sectors like infrastructure, waste management and hydropower.
The delegation comprises representatives from eight Canadian firms -- Arcop Associates, Bombardier, Indo-Canadian Business Chamber, IRD Inc, Lea Associates, Manitoba Hydro International, Premiertech Aqua, Ballard Power Systems.
Meanwhile, Radhes Pant, CEO of Investment Board Nepal (IBN), briefed the delegation on country´s economic outlook and potential areas that are in need of foreign investment. “We are doing series of policy reforms to welcome foreign investment," Pant said, highlighting the government´s move to attract FDI in the country.
According to the Department of Industry (DoI), Canadian firms have invested Rs 5.08 billion (approximately US$ 57 million) in 25 Nepali enterprises as of fiscal year 2010/11. These firms have created 1,926 jobs.

NBF discusses measures to ease energy crisis

The Nepal Business Forum (NBF), a mechanism created to promote public-private policy dialogue, held its eastern regional business forum (ERBF) meeting in Biratnagar on Sunday, recommending implementation of five issues raised in the forum.
ERBF is co-chaired by the regional administrator for the eastern development region on behalf of the government and the president of the Eastern Regional Chamber of Commerce and Industries on behalf of the private sector.
Major issues raised in the meeting were allocation of budget for ERBF to operate it effectively in the coming fiscal year, removal of hurdles in the export of agro products, making Nepali and Bangladeshi currency convertible, promotion of agro products by developing market linkages and establishment of company registration desk in eastern region which will ultimately facilitate businesses of the private sector, says a statement issued by NBF.
During the meeting, the issue of multi-fuel power plant was also discussed, while the private sector asked the government to develop dedicated line citing the eastern region and the Biratnagar industrial corridor were critical to the overall economic health of Nepal.
To maintain the supply of power to this critical area, the meeting discussed the rehabilitation of the multi-fuel plant at Duhabi and building of transmission lines to and from India to ease the current energy crisis, says the statement.
The meeting also discussed establishment of Integrated Customs Point in Biratnagar, formation of special economic zones and strengthening of industrial security, the statement further says.
With a mandate to cover ´doing business´ issues in 16 eastern Nepal districts, ERBF has been organizing public-private dialogue by bringing in 22 chambers into the regional forum.

Tenants of industrial estates start protest against IEML

Tenants of the country´s 11 industrial estates will go on protest against the government from Monday. They are protesting the government´s unilateral decision to increase rent of land and buildings inside the industrial estates.
“We will begin our protest form Monday as the government has turned deaf ear to our demand of reviewing the rent hike decision,” Shailendra Lal Pradhan, president of Federation of Industries in Nepal Industrial Estates (FINIE), said.
The businessmen operating factories inside industrial estates were agitated after Industrial Estate Management Limited (IEML) -- the authority overseeing the management of industrial estates -- increased the rent going against the agreement that it reached with FINIE in January.
IEML had raised rent of land and buildings inside industrial estates in January as per the understanding reached with IEML officials. “But later it increased the rate going against the understanding,” Pradhan said. “This is not acceptable.”
FINIE had asked the government to review the decision by Sunday. “Our demands, however, have not been addressed so far,” Pradhan told Republica over phone.
Meanwhile, IEML has invited FINIE officials for talks. "We will sir for talks,” Pradhan said, adding that the rent hike decision should be scrapped unconditionally.
The federation has set programs like submitting memorandums to industry minister and industry secretary, urging political parties for solidarity, and stop paying rent to IEML.
According to the statistics compiled by MoI, 11 industrial estates cover 5,128 ropanis of land in places like Balaju, Patan, Hetauda, Dhanusa, Nepalgunj, Pokhara, Butwal, Bhaktapur, Biratnagar, Dhankuta and Saptari.
Officials of the federation also lambasted IEML for ineffective management of industrial estates. “Industrial estates even don´t have load-shedding schedule. We don´t know when electricity comes and goes,” Pradhan said, “Security at industrial estates is also not satisfactory.”
Private sector has made investment of more than Rs 13 billion in industrial estates. Factories in the industrial estates employ around 25,000 people, according to the federation.

West Seti hydro project likely to fall in limbo

China Three Gorges Corporation, a Chinese power developer involved in development of much-delayed 750-megawatt West Seti hydropower project, has maintained conspicuous silence on development of the project in the last six months.
"No communication has been held with the developer since last October," a source privy to the Investment Board Nepal (IBN) told Republica.
The corporation had dispatched a team of experts to conduct preliminary study of the project site last October. At that time, the team had promised to discuss future plans within next couple of months.
"It has not shown much interest in the project since then," the source disclosed. "IBN officials claim they had video conference with corporation officials but since nothing has materialized in more than six months we have no grounds to believe the conference--if it was ever held--was fruitful.”
The IBN that received authority to facilitate project implementation from the government also confirmed that it has not heard from the corporation. "We are waiting for their response," Radhesh Pant, chief executive officer of the IBN, told Republica over the phone on Saturday. "We are hopeful they will soon communicate and come up with a financial report."
The 18-year-old project has always made locals dream of a prosperous far western region--where the project is located. But the latest development has disappointed them as the project seems to be falling in a limbo even after the government established a separate high-level entity, IBN, to fast track the implementation of the mega project.
"No one has shared any information about the project since last year," Ratan Saud, president of West Seti Concern Group, a pressure group formed by locals, told Republica. "We are now worried about the future of the project."
Officials at the Office of the Prime Minister and Council of Ministers (OPMCM) also expressed pessimism about development of the project in the near future.
"China is in the wait-and-see mood to make investment in Nepal as the country is going through a transitional phase," a high-ranking OPMCM official said requesting anonymity. "It had expressed enthusiasm to invest before May 2012--before the demise of the Constitution Assembly on May 27. The Chinese developer´s mood has changed since then and is not that interested in project implementation."
Earlier, China´s Exim Bank had expressed interested to finance the project and had proposed Nepal to take commercial loans.
West Seti is one of the priority projects of the government. Through this project, the government aims to supply up to 150 MW of electricity in the western industrial corridor, while the remaining power would be used to fulfill domestic power demand.

Indo-Canadian investors to explore investment

A team of Indo-Canadian businessmen led by Stewart Beck, ambassador for Canada to Nepal, is visiting Nepal next week to explore investment avenues in infrastructure development sector.
“Another focus of the visit is to launch the Canada-Nepal Business Executive Committee (CNBEC)," Archana Mirajkar, senior media and communication officer at High Commission of Canada in India, told Republica over phone.
According to Mirajkar, the CNBEC comprises representatives from Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Indo-Canadian Business Chamber (ICBC). "The business community from Canada is, mainly, looking to have an understanding of Nepal and investment climate there," Mirajkar said.
The delegation will visit Nepal from May 5 and 8.
Mirajkar further informed that the team comprises of representatives from firms like Arcop Associates, Bombardier, IRD Inc, Lea Associates, Manitoba Hydro International, Premiertech Aqua and Ballard Power Systems, and Indo-Canadian Business Chamber.
The Indo-Canadian business delegation will explore investment avenues in sectors like urban development, roads, hydroelectric power and waste management.
“The delegation will explore commercial opportunities in the different potential sectors," Mirajkar said. "It will also try to gain a deeper understanding of the priorities, challenges and achievements of the current government in Nepal."
Additionally, the team will also have in-depth discussion with the officials from FNCCI about the potential projects to invest.
"We are holding a meeting with the Indo-Canadian delegation on Monday," Pashupati Murarka, vice president of the FNCCI, said. "The meeting will focus on identifying different areas where we can work together and where we need foreign direct investment."
Meanwhile, Ambassador Beck also has plans to call on leaders from different political parties and high-level government officials.
According to Mirajkar, Nadira Hamid from Indo-Canadian Business Chamber, Harsh Dhingra from Bombardier, Debaissh Guha from Arcop Associates, Alisa Kreynes from Manitoba Hydro, Pramod Radhakrishnan from IRD, Pradeep Kumar from Lea Associates, Vijay Malani from Premiertech Aqua, and Alok Goel from Ballard Power System are in the delegation.
Statistics of the Department of Industry (DoI) shows 25 firms in the country have foreign direct investment worth Rs 5.08 billion (approximately US$ 57 million) from Canada as of fiscal year 2010/11. These firms have generated 1,926 jobs.
"We will explain the situation of the country to the Canadian investors and convince them that the investment climate here is not that bad," Murarka said. "We will demonstrate them that the real situation is not as bad as portrayed outside."